EasyJet will slash its domestic flights after being hit by Rachel Reeves’ hike to air passenger duty (APD).
The budget airline is cutting down its schedule of flights within the UK, which will especially hit services between London, Scotland and Northern Ireland.
Its incoming CEO Kenton Jarvis said the company would absorb £13million from the Chancellor’s increase to employers’ National Insurance contributions.
Ms Reeves confirmed in her Budget that the Government would hike APD by £2 to £16 for the standard rate or £32 for a return journey between two airports within the UK.
Calling the move ‘disappointing’, Mr Jarvis said Labour was doing exactly what it had said it didn’t want to do in hitting working people, the Telegraph reported.
He said: ‘We were really happy when the Government said they were pro-growth and I understand why they want to increase things like the minimum wage.’
‘We’re an island and we’re taxing what gets the economy moving. It’s at loggerheads with being pro-growth. I don’t think it’s a smart move’, he added.
It comes after EasyJet’s largest rival, Irish carrier Ryanair announced last month it would cut UK capacity by 10 per cent next year – the equivalent of five million passengers.
Its chief executive Michael O’Leary said: ‘This week’s anti-growth air tax increase shows that Chancellor Rachel Reeves has no clue how to deliver growth in the UK economy.
‘This short-sighted tax grab will make air travel much more expensive for ordinary UK families going on holidays abroad and will make the UK a less competitive destination compared to Ireland, Sweden, Hungary and Italy where these Govt’s are abolishing travel taxes to stimulate traffic, tourism, and jobs growth in their economies.
‘Reeves has damaged the UK’s growth prospects and made air travel much more expensive for UK families travelling abroad on holidays or to visit friends and family.’
The Chancellor’s hike to APD will take effect from the 2026/27 financial year.
As well as hitting short-haul air travel, with long-haul economy passengers to destinations like the Caribbean, South Africa and the Far East, the levy will be hiked by £12 to £106.
Users of private jets will see their tax jump by 50 per cent.
Air Passenger Duty was initially introduce in 1994 by then Tory chancellor Ken Clarke. The levy has since been increased, while other European countries, including Sweden and Ireland, have abolished air travel taxes.
Duty rates are based on the length of the flight and the class of cabin.